Today, most product offerings or “inventory” are sold to customers by the providers of these offerings (such as hotels, car rentals companies, airlines, cruise ships, restaurants, golf clubs, etc.) using a one way transaction model. The reservations or purchases flow in one direction, moving from the merchant or service provider to the consumer, either directly or indirectly. This model can include, for example, direct to the customer methods, such as from travel agents who sell to customers, from wholesalers who sell to the travel agents and on to customers, from corporate entities for their employees' travel, and from group operators coordinating events with multiple inventory needs, and so on.
In the realm of business or leisure travel, the two primary types of reservations include refundable and non-refundable reservations. Refundable reservations may be cancelled prior to the reserved date of service or a specifies set time prior to the reserved date with no penalties incurred as long as cancellation occurs before a communicated penalty date and time. The service is either paid for at time of reservation, with the ability to obtain a refund minus any applicable fees if cancelled prior to penalty, or paid for at the time of service. Non-refundable reservations are paid for at time of reservation, and are not eligible to be cancelled. In all cases, the customer either reserves the right to use the service for some future point in time, or prepays for the service that will be consumed in the future.
Many service providers have limited inventory or availability for future time periods. For example, a hotel may have a finite supply of rooms within a hotel building, an airline may have limited seats on an aircraft or within a set fare range, a restaurant will have seating and capacity limitations, a golf club may have set tee times and rules governing the number of players on a course, and so on. The value of the inventory is determined at the time of transaction, and the agreed value is held through the execution of the reservation. The final transaction ends with the customer using the service that they purchased, or reserved for use, and consuming it on the intended date or within a predetermined period of time as agreed by the consumer during the purchase transaction. With most reservations or purchases flowing in one direction (moving directly or indirectly from the merchant or service provider to the consumer) there can be a disparity in inventory between various sales channels, and as a result, an imbalance can exist between demand and supply across these sales channels. Although the service provider or merchant can control the inventory and determine how the inventory is sold, today's reservation and purchase exchange systems generally do not enable interaction between new customers and customers with existing reservations or purchases to allow consumers to buy and sell the inventory from any other party.
Within the hotel industry, demand is very fragmented causing a sub-optimal profitability due to deep discounts and a limited view into future demand. Many hotels and destinations have varying demand caused by events, holidays, conferences, conventions. In periods of high demand there is a cap on revenue as hotels have a fixed inventory and cannot manufacture more rooms for the higher demand. Hotels are comprised of different types of traveler segments including leisure, business, corporate groups, leisure groups. Every segment experiences different booking behaviors and price points. International leisure guests tend to book earlier than domestic leisure guests who book earlier than business travelers. Channels that have emerged over the last decade have been costly for hotels with a high margin cost and eroding average rates.